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The long wait for weight verification changes - almost crunch time

Regulatory changes to container weight verification requirements will need to be carefully considered by all those involved in the shipping industry before they take effect on 1 July 2016. The Australian Maritime Safety Authority (AMSA) has released its draft update to Marine Order 42 (MO42), a legislative instrument made under the Navigation Act 2012 (Cth), which prescribes the legal requirements for the carriage and stowage of shipping containers.

The update reflects changes to the International Convention for the Safety of Life at Sea, 1974 (SOLAS) which now requires, as a condition for loading a container onto a ship for export, that the shipper has provided a verified gross mass (VGM) weight of the container. The intention is that the amendments will reduce the incidence of shipping disasters where inaccurate weight declarations have been a major contributing factor; such as the MSC Napoli (which ran into difficulties in the English Channel on 18 January 2007) and the MV Deneb (which became unstable whilst undergoing unloading operations at Algericas, Spain, on 9 June 2011).

The changes

Although Australian legislation has required shippers to 'accurately' declare gross mass weight since 1994, these changes represent a stricter regime and increased accuracy requirements. The VGM must be obtained by shippers using one of two methods:

weighing the packed container; or

weighing all the packages and cargo items including pallets and then adding the tare mass of the container.

Estimates are not permitted and MO42 will prescribe the equipment and relevant accuracy standards that will be acceptable and recognised for determining the relevant weight.

The shipper must ensure the VGM is communicated in shipping documents sufficiently in advance to be used in preparation of the ship stowage plan, at a time that is likely to be governed by the requirements of the relevant terminal. The template Pre-Receival Advice (PRA) form, which exporters and their agents use to inform a shipping terminal that a container for export is about to arrive at the terminal, has been amended to reflect these requirements. Given the VGM requirement will apply to any containers on vessels sailing after 1 July 2016, 1-Stop Connections, which administers the forms, has advised that inclusion of the VGM weight of containers in PRAs will be required from 22 June 2016.

Should a shipper fail to provide a VGM, the container will not be processed for loading and further, should a container arrive without a VGM stated in its shipping documentation, carriers must not load the container. Carriers and shippers face penalties for non-compliance with strict liability offences and civil penalties imposed under MO42.

Compliance with the accuracy standards

The major concern arising from MO42 is a lack of understanding regarding the standards of accuracy applying to measurement instruments used to determine VGM. MO42 will approve the use of measurements obtained in accordance with the national legislation for trade measurement, being the National Measurement Act 1960 (Cth), the National Measurement Regulations 1999 (Cth) and the National Trade Measurement Regulations 2009 (Cth), or any other AMSA approved standard of accuracy.

AMSA has argued that the amendments bring measurement standards into line with land transport requirements for load limits and as such many will be familiar and compliant with these requirements already. However, these standards are technical and present a substantial barrier for many parties in the export supply chain who are unaccustomed to their use. Such parties will need to move quickly in obtaining expert advice to bring their practices into compliance to ensure there are no disruptions in the supply chain.

Australia appears to be taking a stricter approach to accuracy than some other countries. Whilst the UK has adopted a weight variation tolerance of 5% from the declared weight of exported cargo, AMSA has expressly rejected such an approach providing its maximum permissible error (MPE) would be one that varies in proportion to the weight of the container. For instance, at 1,000kg an MPE of 4% would result in an acceptable 80kg error range (i.e. +/- 40kg). However at 20,000kg the same MPE would result in an error range of 1,600kg, a variance AMSA does not consider acceptable when multiplied by the number of containers loaded onto a single ship. At 20,000kg AMSA's preferred MPE is 0.4% which would result in a 160kg error range.

The United States has not succumbed to pressure from its shippers' lobby to follow the UK's example with its approach being more akin to that in Australia except that it allows for the shippers to verify the weight of the cargo and packing material with the container's tare weight being provided and verified by the carrier. Under the Australian MO42, verification of the container's tare weight rests with the shipper despite the fact that these are often provided by the carriers. It is unclear whether a shipper would be liable if using an incorrect tare weight that was provided by the carrier.

Who is a 'shipper'

Given the burden of responsibility for verification of weight rests entirely on the 'shipper', the crucial question is whether you are in fact the 'shipper' of a container. The draft MO42 fails to provide a definition of 'shipper' but is likely to rely on the SOLAS definition being "a legal entity or person named on the bill of lading or sea waybill or equivalent multimodal transport document as shipper and/or who (or in whose name or on whose behalf) a contract of carriage has been concluded with a shipping company".

Due to the complexity of the international supply chain, the entity named as the 'shipper' may not always have direct or physical control over obtaining the VGM. It is of critical importance that a 'shipper' in these circumstances has appropriate legal arrangements in place to ensure compliance and protect them from liability.

It still remains to be seen how closely compliance will be monitored in Australia and abroad. The critique of previous weight verification measures was not necessarily that they were insufficient but rather that they were poorly enforced. AMSA has not indicated any change in its approach creating the impression amongst some that enforcement will continue to rely predominantly upon reports of non-compliance from stevedores, carriers and other parties, an approach widely considered to be inadequate.

It is apparent that the approach to compliance in Australia and globally will evolve over the coming months. In recognition of probable teething problems, the International Maritime Organisation is expected to release further guidance and advice in the coming weeks and will urge a more pragmatic approach to enforcement by national authorities whilst industry adjusts to the changes brought on by the amendments to SOLAS.

What actions to take

Those in the supply chain must ascertain whether they are the 'shipper' of a loaded container as specified in MO42 and seek advice on whether their current contractual arrangements are sufficient.

Export parties should have commenced reviewing their current practices to ascertain whether they already comply with the increased requirements and, if not, what modifications are needed, keeping in mind that compliance will be necessary for any containers placed onto vessels sailing after 1 July 2016. Whilst there are limited supply of weighbridges, a number of companies have already started to offer VGM weighing services which may be of use to exporters.

All parties involved in the supply chain should review and update their existing supply agreements to accord with the new regime. Given that the responsibility for providing the weight of containers has long rested with shippers, wholesale changes to contracts are unlikely to be required, however it remains prudent for parties to review the terms and conditions of their existing agreements, together with insurance and indemnity arrangements. Express mention of MO42 should be incorporated into agreements, and any party subject to contractual liability for VGM accuracy should be expressly stated, with such liability being brought to the attention of the relevant parties.

Whilst the impending changes do not represent an enormous alteration to current practices, they have been adopted for a reason and it is therefore in the best interests of parties in the supply chain to make significant efforts to update their practices and agreements to ensure compliance and protection for those involved in transactions involving the transportation of goods by sea.

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